Level I

Valuation query

I know this may not directly be related to the topics taught by the CFA.. but I read somewhere ( an IBD training manual frmo a BB) that it is more appropriate to use year specific discount rates  respective to the years as opposed to using one discount rate throughout.

I can understand theoretically why you would use a “2-year zero” for discounting cash flows received in 2nd year etc… but why is it conventional to use a single discount rate throughout?

Cheers Continue reading

Fixed Income, Duration

Could someone please kindly explain the following statement as clearly as possible?

If the investment horizon is shorter than the Macaulay duration, the price impact of a decrease in YTM dominates the loss of reinvestment income and the realized yield will be higher than the YTM at purchase.

Cheers! Continue reading

How important is remembering formulas while studying?

So I know remembering formulas are important for CFA level 1.

But my question is how important is remembering the formulas while you read all 6 chapters on the CFA?

When I first started out, I would copy every formula I saw on a flash card and try to remember each one. However with SO MANY formulas, I figured it took too much time and I just simply glossed over it.

After finishing reading a session, I am able to answer most of the conceptual questions in both Schweser and EOC. Continue reading

Basic EPS

I know that Basic EPS = (Net Income - Preferred Dividend) / Wtd. Avg. No. of Common Shares O/S

However, I’m not getting the correct answer in the below problem and am struggling to figure out what’s wrong.  Continue reading

Impairment of Assets

I’m particularly confused with the concept of impairment, as to, to what extent different assets are impaired when impairment occurs. Here’s an example which is driving me crazy:

Carrying value of assets (in $mill) on 31/12/2010 are as follows:

Cash-100, A/R-20, Inventories-10, PPE-200, Patents-20, Goodwill-75 (TOTAL-425)

Their fair values on the same date are as follows:

Cash-100, A/R-15, Inventories-25, PPE-120, Patents-60 (TOTAL-320)

Therefore, there’s an impairment of (425-320)=$105. Agreed. Continue reading

Calculators - Texas BA plus or professional

Hi

I am pretty sure this question would have been asked at some point of time and I am just starting my CFA prep. I need to buy the TI calculator but i am not sure if I should go for plus or professional?

Any advice or it dosent matter which one you use? I have read the reviews and Pro has better casing and some extra features.

Thanks in advance

VK Continue reading

What to do after reading all Schweser

Hi guys

I need your help in this one. I am probably finishing reading all five Schweser’s books in the end of the week.

I did all the concept checkers but frankly I dont think im ready for the exam. I was wondering what are the next steps for the preparation. Mock exams? QBank?

Thanks ahead Continue reading

Donation of asset, journal entry

In a charitable action, one firm is relieved of an obligation to a second firm. As a result, the
debtor firm debits:
A) An asset
B) A liability
C) A revenue
D) An owners’ equity account
 
Answer is liability. Just wondering why? The debtor received an asset so the journal entry would be
 
Dr Donated Asset
Cr Contributed Capital
 
How does it debit a liability??? Continue reading

Milwaukee - CFA L1 December

Looking for other candidates for the L1 Dec 2014 exam interested in setting up study groups in Milwaukee Area.  Please reach out and let me know.

Thanks! Continue reading

Tarrif/Quota poorly worded Question?

Hi,

Not sure if this is a poorly worded question…

‘Both Tariff & Import Quota cause importing country’s:’

Domestic Consumption                        Product Price

Decreaase                                                    Increase

Increase                                                        Decrease

Decrease                                                     Decrease Continue reading

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